FEMA's Flood Insurance Program Under Scrutiny for High Costs and Low Participation

Bipartisan lawmakers propose legislation to cap broker compensation, while FEMA plans to launch a direct-to-consumer tool by 2025.

Congress created the National Flood Insurance Program in 1968, but it is impossible to buy or renew such plans directly with FEMA, which administers the program.
Instead, the government relies upon a network of private companies to sell and service its policies, handing them nearly one-third of the premiums the program brings in, amounting to almost $1 billion a year.
The government’s flood insurance program is plagued by low-participation rates and is deep in debt, and earlier this year, a bipartisan group of lawmakers proposed legislation that would cap the compensation paid to private brokers.
There have been calls for FEMA to sell policies directly to consumers, which proponents say would make it easier, and potentially cheaper, for property owners to obtain coverage, while saving taxpayers money.
FEMA is developing a 'direct to consumer' online flood insurance quoting tool that it aims to have running by April, 2025.